SEC Charges Former Professional Motorcycle Racer, his Investment Adviser, and Others With Insider Trading
Sept. 27, 2018
File No. 3-18847
September 27, 2018 – The Securities and Exchange Commission today charged former professional motorcycle racer Thomas Earl Hayden, II, his father Thomas Earl Hayden, Sr., family friend John Ryan McDaniel, and longtime investment adviser Gary Bernard Ross with insider trading.
According to the SEC’s orders, Hayden, a Road Racing Manager at Monster Beverage Corporation, traded on the basis of material, nonpublic information about an impending deal between Monster and the Coca-Cola Company, and tipped Hayden Sr. and McDaniel who also traded. In the course of placing his own trades, Hayden disclosed the information to his longtime adviser Ross, who misappropriated the information and traded on his own behalf before placing Hayden’s trades. In the 72 hours before the companies’ announcement in August2014, Hayden, his tippees, and Ross collectively purchased over $770,000 in Monster stock and options, in certain instances borrowing funds for the purchases. The day after the announcement, Monster’s stock price increased30 percent and they made over $283,000 in trading profits.
Without admitting or denying the findings, Hayden, Hayden Sr., McDaniel, and Ross consented to the entry of the SEC’s orders, which found they violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Hayden agreed to disgorge his ill-gotten gains of $97,367, plus prejudgment interest of $14,090, and pay a civil penalty of $197,814 equal to his and his tippees’ profits. Hayden Sr. agreed to disgorge his ill-gotten gains of $22,266, plus prejudgment interest of $3,222, and pay a civil penalty of $22,266. McDaniel agreed to disgorge his ill-gotten gains of $78,180, plus prejudgment interest of $11,314, and pay a civil penalty of$78,180. Ross agreed to disgorge his ill-gotten gains of $86,117, plus prejudgment interest of$12,864, and pay a civil penalty of $86,117. Ross also agreed to entry of a securities industry bar with the right to apply for reinstatement after five years.
The SEC’s investigation was conducted by Brent Wilner and was supervised by Diana Tani, John Berry, and Michele Layne of the Los Angeles Regional Office.